The Job-Loss Headlines for September Skip Key Parts of the Story

The headlines look grim, though most everyone knows the reason why. Not one but two (and three, if you want to get technical about it) put the kibosh on hiring last month, and/or prompted some layoffs along with a handful of outright business closures. The expected job-growth of 90,000 was missed by a country mile, with the country losing (net) 33,000 payrolls. Those forecasters knew they were mostly throwing darts with a blindfold though.

Regardless, there were some bright spots, and wherever we ended September is still where we have to start October, so a closer look is merited despite the mostly-skewed September numbers.

The bad news: The number of people with jobs in the United States fell 33,000 last month, as was noted. The good news: The unemployment rate fell from 4.4% to 4.2% in September, as most of the people that lost a job last month weren't looking for another one just yet. They had more pressing matters to take care of, like cleaning up the post-storm mess or helping friends and family do so.

A slightly more relevant measure of the nation's job picture, however, is the number of employed, unemployed, and people who are not in the labor force (working or unemployed) but would still like to have a job.

As for the total number of working people, this is where things get interesting, encouraging, and confusing. The number of people with jobs as of the end of September shot up to a record high of 154.34 million. How does that happen when the country also lost 33,000 jobs? The job-less measure is determined by a phone-based survey. The employment tally is measured through other, more report-based means. Neither are perfectly accurate, but the reports are "more right" than the phone survey methodology is.

There's also the likelihood of confusion as to what counts as a job. For some, storm cleanup and repair work is work, but not a paying job. For others it's paid employment, even if only temporary.

Either way, in conjunction with the disparate changes in employment totals, the number of officially-unemployed people fell to a multi-year low of 6.8 million. The number of people who weren't counted in the labor force but would still like a job fell from 5.84 million to 5.63 million.

Along these same lines (and even more encouraging, suggesting the reported job losses of 33,000 weren't an accurate description of what happened last month), the labor force participation rate surged to a multi-year high of 63.1%, and the employment population ratio moved to a multi-year high of 60.4%. The former can be skewed by something like a hurricane, as it takes people out of the labor pool altogether. The latter can't be skewed though -- a greater portion of U.S. residents are now working.

Last but not least -- and perhaps most important -- paychecks for those people who are working edged higher last month, hinting there's more demand for workers than supply of workers. Hourly wages were up 0.2% month-to-month, and grew 2.9% on a year-over-year basis.

It's still a report to be taken with a grain of salt; a trio of hurricanes leads to skewed outcomes, and the kinks can take weeks if not months to work out. Based on the context of the data to the extent we can trust it though (and bearing in mind the trend of all these data points before September), it's difficult to come to any other conclusion than the labor market is improving, which is an indirect indication that the economy is improving.